Bid Protests

The Section 809 Panel, which is tasked with developing and providing recommendations to improve and enhance the efficiency of the Department of Defense procurement system, issued the third volume of its report and recommendations Jan. 15, 2019. Among the numerous recommendations for streamlining DoD acquisitions, several of which relate to bid protest practice, three in particular propose potentially significant changes to the DoD bid protest process, with the aim and constant challenge, of balancing the dual interests of ensuring accountability in the procurement process while managing or reducing the delay and disruption that protests invariably have on procurements. The notable recommendations are Recommendations 35, 67 and 69.

Perhaps the most potentially impactful recommendation is Recommendation 35. Among other things, this recommendation proposes changes that would deprive the Government Accountability Office and the U.S. Court of Federal Claims of both pre and post-award bid protest jurisdiction for acquisitions of “readily available” products or services in DoD acquisitions that are valued at $15 million or less. The term “readily available” differs from commercial items or commercial-off-the-shelf offerings. As proposed, “readily available” would mean “with respect to a product or service, . . . a product or service that requires no customization by the vendor and can be put on order by customers. Such term includes optional, priced features of products and services in a form that is offered for sale in the normal course of business.” Offerors would still have an option of protesting at the agency but the traditional forums for protests would be rescinded if this proposal goes through. Along with the already existing jurisdictional limits for certain task order protests, Recommendation 35, if implemented, would further curtail DoD protest options. Continue Reading The Section 809 Panel Recommends Substantial Changes to DoD Bid Protests

If you bid, but lost out, on a solicitation issued by the Federal Aviation Administration (FAA), you may be thinking of filing a protest to challenge the award. However, FAA procurements are unique in the sense that protests of such procurements are not decided by either the U.S. Government Accountability Office (GAO) or the U.S. Court of Federal Claims, the two venues which decide nearly every other type of protest. The FAA is one of the few federal agencies not subject to the Federal Acquisition Regulation (FAR). While an organization within the Department of Transportation (DOT), which is subject to the FAR and the Department of Transportation Acquisition Regulation (TAR) (48 CFR 12), the FAA, at the direction of Congress, established its own rules and procedures, the Acquisition Management System (AMS) and it is the AMS that governs the FAA’s bid protest regime.

It is not uncommon for government contractors to have one or more related companies (e.g., parent/subsidiary companies) involved in the industry. One way the government keeps track of such related entities is to utilize Commercial and Government Entity (CAGE) codes. These codes are used for a variety of purposes, including facility clearances. As a recent Government Accountability Office (GAO) decision reminds contractors, CAGE codes are material and play an important role in establishing the precise legal identity of an offeror which, when examining a protest, will not to be taken lightly.

In this particular case, the United States Transportation Command (Agency) issued a request for quotations (RFQ) that required offerors to (among other requirements): (1) identify their CAGE code and (2) have and maintain a valid facilities clearance (FLC) at the secret or higher level. In response to the RFQ, the one offeror (the Protester) timely submitted its offer, identified CAGE code 6YTU0, and indicated it possessed a secret FCL. After several inquiries by the Agency and responses from the Protester, it was discovered the CAGE code the Protester provided belonged to the Protester’s wholly-owned subsidiary. It was the CAGE code assigned to the subsidiary (and not the Protester) that was linked to the secret FCL. Based on this, the Agency advised the Protester it was ineligible for consideration for award. Continue Reading GAO Upholds Agency’s Rejection Of Protestor’s CAGE-Y Proposal

This webinar will provide contractors a look behind the curtain at GAO and U.S. Court of Federal Claims bid protests. Attendees will leave with a much better understanding of how the bid protest process really works at the federal level. The webinar will also cover how contractors can best prepare for a protest by maximizing their debriefing; analyzing which protest avenues are most advantageous; recent protest trends; and debunking common protest myths.

Click here to register for the webinar. The webinar is Free for PNDC members, and $35 for non-members

Many politically charged issues are likely to steal the headlines during the confirmation hearings for President Trump’s nominee for the U.S. Supreme Court, D.C. Circuit Court of Appeals Judge Brett Kavanaugh. However, one issue unlikely to make headlines is the impact that Judge Kavanaugh’s confirmation may have on the doctrine that gives “controlling weight” to the way government agencies interpret their own regulations — known as the Auer Deference doctrine.

Given the composition of the Supreme Court, recent Judicial attempts to re-examine the doctrine, and Judge Kavanaugh’s previous statements, Judge Kavanaugh’s confirmation signals the probability of the Supreme Court’s eventual overturning of the Auer Doctrine — which would be good news for government contractors.

What is Auer Deference?

Auer deference (also referred to as Seminole Rock deference) is a principle of administrative law that requires courts to give “controlling weight” to the way government agencies interpret their own regulations, even where the agency’s interpretation is not “the best” reading of the text in question. Developed from the U.S. Supreme Court’s holdings in Auer v. Robbins, 519 U. S. 452 (1997) and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), the doctrine mandates that courts credit the agency’s interpretation as controlling as long as it is not “plainly erroneous or inconsistent with the regulation.”

This obviously puts a thumb on the scale for agencies in the context of contract disputes or bid protests tied to certain regulatory interpretations. It can be particularly harmful to contractors when the agency has altered its interpretation during the performance or procurement of a contract, or worse, during the course of litigation. Unlike agencies whose procurements rely on interpretation of the FAR, agencies that draft and enforce their own regulations (such as the Small Business Administration) are sometimes empowered under Aeur to alter their interpretation to suit the agencies’ needs on a case-to-case basis. Continue Reading Why Judge Kavanaugh’s Confirmation Could be Good News for Government Contractors

It seems like a yearly ritual. The U.S. Senate Armed Services Committee (“SASC”) drafts and passes a version of the annual National Defense Authorization Act (“NDAA”) that includes reforms aimed at curtailing bid protests, while the House Armed Services Committee (“HASC”) drafts and passes a version of the NDAA that omits these bid protest reforms. Every year, the majority of the reforms in Senate are eliminated during the conference committee process. However, the FY2019 NDAA appears to be headed towards a break in this yearly ritual.

On June 5, 2018, the SASC introduced its version of the FY2019 NDAA to the Senate. For the first time in several years, the SASC’s proposed version of the FY2019 NDAA does not contain any major reforms to limit bid protests. The SASC’s proposed FY2019 NDAA (Section 811) contains only a few provisions aimed at bid protests, neither of which would limit bid protests. Both provisions appear to be related to findings in RAND’s 2018 report of DoD bid protests:

The SASC proposed a provision that would require the Secretary of Defense to carry out a study of the frequency and effects of bid protests involving the same Department of Defense (“DoD”) contract award or proposed award that have been filed at both the Government Accountability Office (“GAO”) and the Court of Federal Claims (“GAO”), and establish a data collection system to better track and analyze bid protest trends in the future.

In the RAND Corporations’s 2018 report on DoD bid protests, RAND highlighted some concerning statistics regarding bid protests filed by small businesses. RAND discovered that more than 50% of protests were being filed by small businesses (more than double the percentage of prime contract dollars going to small businesses), and at GAO protests filed by small businesses tended to have significantly lower sustained and effectiveness rates, and were 50% more likely to be dismissed as “legally insufficient.” As a result of these findings, and others, RAND recommended that Congress consider approaches to reduce and improve bid protests from small businesses.

Please join the ABA Section of Public Contract Law Small Business Committee’s panel for a broad discussion of RAND’s findings and recommendations specific to small business protests, and the feedback RAND received concerning these recommendations. In addition, the panel will examine other approaches under consideration that were not included in the report, and will open the floor to a discussion on ideas to reduce and improve bid protests from small businesses.

For years bid protest filings at the Government Accountability Office (GAO) have been done by e-mail (or even fax, mail or hand delivery). In January 2014, Congress directed GAO to establish a electronic filing and document dissemination system (not unlike the PACER system used by federal courts), and authorized GAO to charge a filing fee to those filing bid protests. Since that time, GAO has been working on developing an electronic filing system, which GAO calls “EPDS.” The process has taken longer than most expected, but in February 2018 GAO announced EPDS was almost ready and started handling some protests on EPDS as part of a pilot program. Today, GAO issued the final rule for EPDS, and announced that rule would take effect on May 1, 2018. This means that starting in May all bid protest at GAO must be filed through EPDS (protesters will no longer be able to file protests by email) and GAO will charge a $350 fee for filing a protest.

Given the short and strictly enforced time limits for filing protests at GAO, those who file bid protests should consider signing up for an account immediately at https://epds.gao.gov/, and familiarize themselves with the new rules well before they take effect May 1st. GAO has provided handy instruction manuals and videos for EPDS at https://www.gao.gov/legal/bid-protests/file-a-bid-protest.

As we previously discussed, when Congress passed the FY 2018 NDAA it required the Department of Defense (“DoD”) to issue regulations providing for enhanced post-award debriefing rights on certain DoD procurements. Specifically, Congress mandated enhanced content requirements, a follow-up question process, and corresponding changes to the time to file a bid protest at GAO with a suspension of performance of the protested contract (a “CICA stay“):

Enhanced Content Requirements: While protecting the confidential and proprietary information of other offerors, the debriefing shall include, at a minimum, the agency’s written source selection award determination, redacted to protect the confidential and proprietary information of other offerors. These enhanced content requirements apply to “required” debriefings if (1) the contract award exceeds $100M, or (2) the contract award exceeds $10M and the contractor requesting the debriefing is a small business or nontraditional contractor who request such disclosure.

Follow-up Question Process: Disappointed offeror would be allowed the opportunity for follow-up questions within two business days of receiving a post-award debriefing to be answered in writing by the agency within five business days.

Time to file protest at GAO and obtain a CICA stay: The debriefing would not be considered concluded, and the five day post-debriefing period pertaining to when a protest needs to be filed to invoke a CICA stay would not commence, until the day the agency delivers its written responses to the disappointed offeror’s follow-up questions.

The enhanced content requirements were to be implemented through DFARS regulatory changes, which DoD has until June 2018 to issue. On the other hand, the follow-up question process, and corresponding changes to the time to file a bid protest at GAO with a CICA stay, are already reflected in statutory changes (10 U.S.C. 2305(a)(5) and 31 U.S.C. 3553(d)(4)). Still, changes to the DFARS were expected to implement the follow-up question process. But this week, in advance of changes to the DFARS, DoD issued Class Deviation 2018-O0011 – Enhanced Postaward Debriefing Rights, which provides for the immediate implementation of the follow-up question process (and corresponding changes to the time to file a protest at GAO and obtain a CICA stay): Continue Reading DoD Begins Implementation of Enhanced Post-Award Debriefing Rights

At times, a prime contractor can effectively be the middle man between the government and a subcontractor. The FAR directs that the prime contractor should always provide value to the overall procurement; however, many prime contractors require the assistance of subcontractors to fulfill this contract requirement. The recent CBCA case VSE Corporation v. Department of Justice spotlights that, even in fixed-price contracting, the prime contractor may or may not have bid with locked in subcontract rates. If the government accepts the prime contractor’s offer and the subcontractor raises their rates, the prime contractor is liable for the additional costs, not the government. In VSE, this led to fireworks for the prime contractor, literally.

VSE provided storage services to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to store seized property. The initial contract was a cost-reimbursement contract for which VSE was paid on a per pound basis. ATF stored seized fireworks with VSE at a facility owned by VSE’s subcontractor Heritage Disposal & Storage and Heritage charged VSE $0.10 per pound to store the fireworks. Subsequently, the government asked VSE to reconfigure the fireworks for safety reasons. Despite VSE’s contract with Heritage, Heritage increased its storage billing rate from $0.10 per pound to $0.195 per pound based on the reconfiguration.

The government then issued a new solicitation for nationwide seized property to include fireworks. Rather than a cost-reimbursement contract, this contract was fixed-price. VSE submitted a bid where it identified the fireworks and proposed a base year price of $1.95 per square foot. However, this price would not be sufficient to cover the expenses for the fireworks storage as Heritage had been charging VSE approximately $170,000 per month to store the fireworks while the government had only been paying VSE approximately $77,000 per month for storage. Continue Reading Boom: Fireworks between Subcontractor, Prime Contractor, and Government (Literally)

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